MedMen Enterprises Inc. (OTCMKTS:MMNFF) executed a definitive agreement as part of its restructuring and turnaround strategy with some lenders that include Stable Road Capital and affiliates, Gotham Green partners as wells as its most important landlord Treehouse Real Estate Investment Trust.
MedMen implements a turnaround strategy
The company is implementing a financial restructuring and turnaround strategy aimed at supporting its retail footprint. MedMen’s plan will, over the next 12 months, defer around $32 million in cash commitments as well as offer more balance sheet flexibility. Tom Lynch, the company’s interim CEO, indicated that the turnaround plan‘s implementation was the best way o9f ensuring the company continues to grow as a leading marijuana retailer in the US. Lynch added that the widespread support they have received from landlords and lenders will allow MedMen to continue executing its turnaround.
MedMen amends its credit facilities
At the end of March, MedMen closed an additional $12.5 million in proceeds from its senior convertible facility led by Gotham Green Partner’s affiliated funds. As part of the turnaround plan, MedMen and Gotham Green amended the senior secured facility. According to the amendment, the minimum liquidity threshold that was $15 million has been waived until the end of September and reset to $5 million thereafter, $7.5 million due in march 2021 and $15 million effective by December 31, 2021.
The company closed a definitive agreement on January 24, 2020, for the amendment of the $77.7 million secured term loan with Stable Road Capital and affiliates managed funds. October 2018 loan interest increased to 15.5% from 7.5%, with 12% payable each month in cash depending on outstanding principal with 3.5% expected to accrue monthly to the principal. Also, the minimum liquidity threshold has been restructured.
Treehouse agreed to defer part to the current monthly base rent for the company for 36 months from July 1, 2020, until July 1, 2023. The deferred rent accrues 8.6% interest per year during the deferment, and MedMen issues Treehouse with 3.5 million warrants exercisable at $0.34 per share.
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